Martin_Contracts_Fall_2010
CONTRACTS OUTLINE:
“A contract is a promise or a set of promises that the law will give a remedy for. Restatement 1. Promise is a commitment to act or not to act in a specified way to justify the promisee the understanding that a commitment was made. R.2. The promises are demonstrated by mutual assent. R 3 and 4. Typically a contract requires mutual assent and a consideration. R 17. Mutual Assent is typically shown by offer and acceptance. R 22.” ß Use in essays.
What is a contract? Restatement (Second) of Contracts 1: A contract is a promise or a set of promises for the breach of which the law gives a remedy, or the performance of which the law in some way recognizes as a duty. Contracts are defined as Mutual Assent+Justification=Contract, where usually Mutual Assent=Offer+Acceptance, and Justification=Consideration OR Reliance.
The Autonomy and Security Principles
1. Promise
a. Hawkins v. McGee – Doctor repeatedly promises to fix hand and fails to do so. Not fulfilling the promise constituted a breach of promise. Although typically in medical cases promises are not binding, the solicitation with the promises made it a binding contract.
I. Restatement 2: Promise is a manifestation of intention to act or refrain from acting in a specified way to justify to a promisee an understanding that a commitment has been made.
2. Intention of the Parties
a. Lucy v. Zehmer – Drunk guy makes a deal for the sale of a farm, and writes that he agrees to the sale: Intent is looked at from an objective standard and not subjective, from a reasonable person’s viewpoint. It is the outward manifestation that counts. Behavior of the parties implies the existence of a contract.
I. Restatement 19: The manifestation of assent may be made wholly or partly by written or spoken words or by other acts or by failure to act.
b. Embry v. Hagardine – No renewal of employment is signed, but continued to work. Boss states to employee: “go on and get your men out”. Lucy + Reliance. Just because there was no written contract, both parties continued to behave as if they were under it, and the promisee relied on this, so there was a contract. OUTWARD EXPRESSION OF INTENT! Promisor made it seem there was an offer.
I. 2 Corbin on Contracts §5.3: Neither “serious intent” nor intention to be legally bound is required for an enforceable contract.
c. Oswald v. Allen – Swiss coin collection to be sold, but parties differ on the content of the deal. Mutual assent where meaning prevails. No meeting of the minds in this case since each had a different definition of item to be sold.
I. Restatement 20: There is no manifestation of mutual assent to an exchange if the parties attach materially different meanings to their manifestations and neither party knows or has reason to know the meaning of the other.
3. Offers
Restatement 24: An offer is a manifestation of willingness to enter into a bargain so made as to justify another person in understanding that his assent to the bargain is invited and it will conclude it. For an offer to be valid it needs intent of the offeror, clear, definite and explicit terms of the offer, and to be communicated to the offeree.
a. Mesaron v. United States – US mint liberty coins for sale, but are a limited offer through mail. Advertising for the sale of goods is a solicitation of offers, but not an offer. Mass ads are not power of acceptance but an invitation to offer.
I. Restatement 26: A manifestation of willingness to enter a bargain is not an offer if the person to whom it is addressed knows that it is not intended as an offer.
b. Lefkowitz v. Great Minnepolis – Fur coat in an ad advertised for a dollar, but not for men. Generally ads are not offers, EXCEPT when it is clear, explicit and does not leave it open for negotiations. Offers must be explicit with clear terms.
I. Restatement 26 comment b: Advertisements are not ordinarily intended or understood as offers to sell. When an offer is directed to the general public (as stated on Rest. 29) there must be language of commitment or invitation to take action without further communication.
II. HYPO: Supermarket diet coke
4. Power of Acceptance
a. Akers v. JB Sedberry – Employee offers to resign, but it is not accepted immediately. Two weeks later employer announces his resignation. Power of acceptance dies when it lapses (reasonable time period), rejected or counteroffer.
I. HYPO: Phone offer of a car, person hangs up, offer is dead
II. Restatement 41: An offeree’s power of acceptance is terminated at the time specified in the offer or if no time is specified, at the end of a reasonable time (question of fact).
b. Ardente v. Horan – Offeree makes a bid for a house and when sending check for the house, asks for additional terms (fixtures) to be included in the sale. An acceptance that is conditional to additional terms being accepted is not an acceptance but a consideration (This is common law! Not sale for goods!)
I. Restatement 59: A reply to an offer which purports to accept it but it is conditional on the offeror’s assent to additional or different terms, is not an acceptance but a counteroffer.
c. Petterson v. Pattberg – Person has a chance for a reduction of his mor
t to be unilateral (no promises are requested in consideration of the offeree’s promise but full performance is requested for acceptance of it) or bilateral (where there are mutual promises from both parties), the law will presume it is a bilateral one. DEATH WILL NOT REVOKE A BILATERAL CONTRACT!!!
I. Restatement 62: Where an offer invites an offeree to choose between acceptance by promise or by performance, to begin a performance is to accept the offer, and such an acceptance operates as a promise to perform.
b. Houston Dairy Inc. v. John Hancock Insur. – Party makes an offer for a loan in a limited time. Offeree accepts after the time with a deposit check and offeror stays silent while terms are negotiated. Then offeree finds a loan with someone else in better terms and asks for the deposit check back. To accept after the time limit is considered as a counteroffer. Acceptance by silence is, with exceptions, not a form of acceptance, it must be communicated to the other party.
I. Restatement 69: Where an offeree fails to reply to an offer, his silence and inaction is not an acceptance, unless…
c. Cole-McIntyre-Norfleet Co. v Holloway – Seller negotiated a deal where he was made an offer to sell barrels to buyer. Due to previous deals with seller being similar to the present one, after two months buyer asked for delivery, where the seller informed that he did not accept the offer. To unreasonably delay in accepting, when similar deals had taken place previously without issue, implies an acceptance of the offer unless previous notice of rejection to the offeree is given.
I. Restatement 69: … unless where (1) the offeree takes benefit of offered services and is given reasonable time to reject them; (2) the offeror has stated or given reason to the offeree to understand that silence is an acceptance of the offer or; (3) because of previous dealings it is reasonable that the offeree notify the offeror if he rejects the offer.
Seaview Ass’n of Fire Island v. Williams – Homeowner refuses to pay homeowner’s association fees. Where mental assent is present, and in the name of
